USD rises above 114 (was 112, was falls below 89)

[68Camaro]

I have only a modest belief in technical analysis given the number of markets that are rigged, but the head and shoulders formation in a downward trend broke out to the downside, confirming at least a short term bear market for the USD. We haven't seen anything below 90 in quite awhile. Inflation building suggests this might continue, and be favorable to PMs (despite the parallel flight to electronic "currency".

[Updated title for Apr 2022 prices when it went over 103]

[Updated title for Sep 2022 prices when it went over 112]

2022-09-23 Addition: Except for a 2 year period from mid-2000 to mid-2002, the USD is now higher than it has ever been since it was established and went through it's initial shake-down period in the mid 1980s. Plots of the track of the US over the last 6 months, and over its history, are shown below. A high USD tends to drive commodity prices down in the short-term, and if one has the resources, such a time creates a buying opportunity for those holding USD, while people in other parts of the world find commodity prices in their currencies to be spiking up, making them hard to afford. While gold seems relatively "cheap" now, that is largely due to the spike in the USD. With the existing USD, current gold prices around $1650 are 20+% lower than they would be if the USD was in the low 90s (the average value for most of it's life), at which point gold would be over $2000/oz.

6 month plot

6-month plot of USD

6-month USD.png (32.31 KiB) Viewed 904 times

37 year plot

37-Year USD plot

37 year USD plot.png (36.63 KiB) Viewed 904 times

9/28/2022 updated for move over 114

[Recyclersteve]

Isn't a weak dollar good for U.S. multinational companies (Coca Cola, Microsoft, Boeing, etc.)? If so, that could be the tailwind that keeps the market going for a while. It will be interesting (since we are just at the beginning of earnings season) to see what comments come out during the press releases and conference calls about earnings being better than they normally would due to the weak dollar.

[IdahoCopper]

Anytime fundamental numbers stray outside of long-term boundaries, its time to pay close attention. The GSR is pretty high right now, 78.5.

[68Camaro]

It toyed with the 90 line yesterday which makes you wonder if this is going to be the point where TPTB sell euro or yen to bolster the dollar. But they didn't and it didn't just pass 90 it fell through it and is now closer to 88 than 90.

[Recyclersteve]

Treasury Secretary Steven Mnuchin came out today and spoke in favor of a weak dollar, which shocked lots of people. Later I heard someone on CNBC saying that Mnuchin meant to say exactly what he said and I'm pretty sure the reason why had something to do with all the money that will be coming back into the U.S. from overseas due to the new lower tax rates.

[johnbrickner]

Its the race to the bottom or the policy of beggar thy neighbor (more like bugger thy neighbor).

The 2nd half of 2014 the U$D started getting stronger and stayed that way 'til 2017. During that time the rest of the world had a chance to increase their exports as the U$D bought more goods that were cheaper compared to. Now it's the US's turn to have weaker currency and enjoy the increase in GDP and jobs that will result. And don't forget the new tariffs the other half of the bugger policy used to protect domestic manufacturers. All part of making America Strong Again strategy.

So even though treasury secretary Steven Munchkin says it's one way, the white house says:

"Look, currently we have a very stable dollar because of how well the U.S. is doing, and it's as powerful as it's ever been, And therefore, it's the reserve currency of the world, and that's the official position at the White House . . . we believe in free-floating currency. The President has always believed in that. And we have, like I said, a very stable dollar in large part due to how well the U.S. economy is doing right now".

Another situation of where we are subject to mixed messages. It's either this or the rest of the world is dumping the U$D and it's use in favor of other currencies as they recognize the U$D no longer carries value as the reserve currency of the world. In which case, it's still a mixed message.

You have to go back to the very end of 2014 where the U$D is this cheap.

[68Camaro]

Gold is down this morning, and has been dropping for a number of days - some might wonder why.

This thread started with a post 4 years ago when the USD was in a lull. In recent weeks the USD (previously in a tight range for a couple years at about 92-93) has climbed to 103.57 (at last look), it's highest level since about 2003-ish. Put another way, with the USD that high, the fact that gold is still near 1900 and silver is still over 23, is pretty remarkable. I just looked at plots of gold vs CAD, GBP, CNY, CNF, YEN, EUR as well as the USD, and in the most of the currencies gold is at an all-time high, and for those that it isn't, gold is near the high and going up.

Here is the plot vs the YEN

15 year gold in YEN.png (13.09 KiB) Viewed 1168 times

As we've said numerous times, in crisis the money - for a time - goes to the best horse in the glue factory. As bad as things seem to us, that is still the USD. Given that, if you own USD, this is still a good time to buy PMs in USD. Even though the prices *seem* high to us, the prices are a bargain compared to the prices that others around the world see in their currencies. By comparison, prices in USD are better than in almost any other currency, and the time will come, sooner than later, when prices in USD will spike and you'll wish you had bought when you could. Just sayin'...

[hirbonzig]

Bought a couple sovereigns to take advantage of the lower spot and higher USD. I like an analogy I heard recently, the USD is just the cleanest shirt in a pile of dirty laundry right now.

[68Camaro]

Bump to the top to highlight the update in the OP.

[Doctor Steuss]

Thank you '68. Either I missed this the first time, or I forgot it (more likely the latter).

I learned new things from you today -- and that makes for a very good day.

[68Camaro]

Now over 114, TTT